Sunday Reader Question: taking money out for travel?

It’s always a good idea to have some local currency when travelling, for street food, miscellaneous expenditures, tips, etc. Some people go to currency exchange shops to take money out before their trip, or to a bank. Others have it delivered via a special service, or take it out locally. So what is the best way to take money out for a trip?

To figure this out, we’ll play with a hypothetical. Let’s say I’m taking a trip to France. I want to have 100 Euros for my trip. How much will the 100 Euros cost me in Canadian dollars, depending on the venue of exchange?

What do we notice? At the 100€ rate, it’s way cheaper to order foreign currency from a bank (TD is the cheapest) prior to travel. Travelex, which is a very popular exchange service, is by far the most expensive option.

With the $5.00 ATM fee on debit/credit withdrawals, at the 100€ rate, it doesn’t make sense to even use the no-forex Chase Amazon/Marriott card. However, if we increase the amount, say to 500€, it is cheaper:

Visa Spot Rate + typical $5.00 foreign ATM fee: 500€ = $724.32CAD

TD Canada Trust: 500€ = $735.40

Honestly, I’m surprised by this. I always thought it was way better to use my Chase Amazon Visa at a foreign ATM for cash withdrawals. But frankly, with the Δ between the Visa Spot Rate + $5.00 Foreign ATM fee vs. TD Canada Trust being only $11.08 at a relatively large withdrawal of 500€ (this doesn’t even consider a possible domestically originating ATM surcharge), I’d go for TD Canada Trust just to have the assurance of having cash on my person and not risk ATM rejections.

I don’t usually take that much cash out for a trip, and 500€ is definitely my upper limit. The more cash you need, the more it makes sense to use a Chase Amazon/Marriott visa (ONLY if you’re taking the money out at one go – you’ll pay the $5.00 ATM fee for each withdrawal… plus you’d be paying interest without a grace period, though you can avoid this by over-paying your card). Considering I often need cash on arrival for entry purposes, and it’s nice to skip having to find an ATM at the airport, I think I’ll probably be using TD Canada Trust for my future foreign exchange needs.

Instead of taking out “a small amount” as you suggest, why not take out as much as you can, if you find a good rate ( see above) That way, you have money at home and you don’t have to go through the same hunt every time you travel to a foreign country.

Another way to save some money is to apply for an ICBC global debit card (with UnionPay logo) @ icbk.ca. It charges $5 per withdraw outside Canada but there’s no 2.5% currency conversion fee because the transaction goes thru the UnionPay network instead of Visa/MasterCard’s. Many countries’ ATMs (including Canada, USA, EU, Africa etc…) take these cards, and the money is debited from the CAD Chequing Account. I just used it in South Africa to withdraw some Rand, and I was only charged $5 + real-time CAD/ZAR rate 😀